iBuyers are a common trend in our real estate industry. iBuyers are companies that will buy homes for cash without those homes ever going onto the open real estate the market.
The most common and well-know iBuyers are:
What are the advantages of Selling to an iBuyer
There are a number of advantages to selling a home to iBuyers.
These include not having:
- To stage the property
- To maintain the property in a showing condition
- Buyers coming in and out of the property
- To worry about scheduling those showings with the buyers.
Closing Date Flexibility
iBuyers can also be flexible with closing dates.
For example, if you need to move quickly due to employment relocation, an iBuyer can generally close escrow rapidly because they are purchasing the property in cash.
Another example deals with purchasing a new home build. If you don’t know exactly when the builder will complete your new home, but you want to know that your existing home is sold, you can work with an iBuyer to schedule the closing date of your existing home to correspond with the closing date of your new home.
What are Concerns of Selling to an iBuyer
While there are several advantages to selling a home to iBuyers, there are also some concerns.
The primary concern is who is representing you as the seller in the transaction.
Real Estate Agent Represents the iBuyer
iBuyers employ licensed real estate agents. These licensed real estate agents are the ones that are drafting the contract, drafting the clauses for the contract, negotiating the contract, and making sure that the iBuyer is represented in the transaction.
These licensed real estate agents DO NOT represent the seller.
In this video Sean St. Clair explains the pros and cons of working with an iBuyer
iBuyer’s Have Attorneys
Additionally, iBuyers have attorneys on retainer or they employ in house counsel. These attorneys are reviewing the purchase contracts and clauses to make sure they are acceptable, and they are reviewing any other documents that are being provided to the seller as part of the transaction. And what are those attorneys doing? They are making sure that the iBuyer is protected in the transaction.
iBuyer’s Choose the Title Company
Finally, the iBuyer is generally the one who is going to choose the title company. This is the escrow agent who will be closing the transaction. The title company chosen by the iBuyer is generally one the iBuyer uses on a regular basis and with whom the iBuyer has a relationship.
Once again, where is the representation and protection for the seller in the transaction?
Seller’s Real Estate Representation
Sometimes the seller is represented by a licensed real estate agent in the transaction and, in that circumstance, has more protection. However, what about the circumstance where the seller notices the advertising of an iBuyer on a billboard, television, or radio and decides to contact the iBuyer directly and enter into the transaction without a licensed real estate agent?
In that situation, the seller should seek legal advice before entering into the purchase contract with the iBuyer or signing any documents with the iBuyer.
This can be accomplished by having the attorney review the documents and meeting with the seller, whether by phone, in person, or even through a video conference like Skype.
Together, the attorney and seller would go over the purchase contract and other documents to make sure that the seller fully understands and appreciates the legal ramification of the documents that they are being asked to sign. The attorney will also look at the documents and make sure there is nothing out of the ordinary or that would be detrimental to the seller in the transaction.